In re Samsung Galaxy Smartphone Marketing and Sales Practices Litigation.

Background

The plaintiffs—Omar Atebar, Lizett Anguiano, Tomas Hernandez, Eric Pirverdian, Tomig Salmasian, Dior Dee, and Jesus Sanchez—brought a proposed consumer class action against Samsung Electronics America, Inc. and Samsung Electronics Co., Ltd. They alleged that the Galaxy S6, S6 Edge, S7, and Note5 smartphones had lithium-ion battery-related risks of overheating, fire, and explosion. The individual plaintiffs reported problems including overheating, shortened battery life, sluggishness, dropped calls, charging issues, and application or internet problems.

The complaint asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, along with a claim for unjust enrichment. The plaintiffs sought economic losses, restitution, punitive damages, costs, and fees. The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. The defendants also argued that the fraud-based claims failed Rule 9(b), which requires fraud allegations to describe the alleged misconduct in particular detail.

Earlier in the case, the court compelled six named plaintiffs to arbitrate and dismissed their class claims because their arbitration agreement contained a class-action waiver. The court also dismissed the remaining claims in the first amended complaint, finding that the plaintiffs had not adequately alleged a defect in each phone model or Samsung’s knowledge of a defect when the phones were sold. The court allowed amendment but later warned that the second amended complaint would be the plaintiffs’ last opportunity to amend.

Judicial Notice

The court accepted certain materials for consideration under the incorporation-by-reference doctrine and judicial-notice rules. It considered the Note7 recall website, a giffgaff article stating that smartphones from Samsung, Sony, Apple, Huawei, and Nokia had non-removable batteries, and a Consumer Reports article. The court noted that the recall website described the battery defects causing the Note7’s thermal events as unique to the Note7 devices. It also noted that a photograph in the complaint showed a Note7 rather than one of the four phones at issue. The court denied the requests concerning Exhibits B, C, F, G, and H without prejudice.

Alleged Defect

The plaintiffs argued that the four phones shared a defect because they were designed, manufactured, or assembled similarly to the Note7. They relied primarily on two shared characteristics: the phones had self-enclosed batteries, and some batteries were made by the same manufacturer as Note7 batteries.

The court held that these allegations did not plausibly identify a defect in the four phones. Self-enclosed batteries were an industry standard, and the plaintiffs did not allege that every Samsung phone with such a battery was defective. The battery models also had different specifications, and the Note7 and Note5 each had two battery suppliers. The court therefore would not infer that every battery made by a particular supplier was defective because one supplier’s Note7 battery model was defective. The court further found that the complaint relied on the Note7’s root-cause analysis without alleging facts connecting that analysis to the phones at issue.

The court concluded that the plaintiffs had not adequately pleaded the existence of a defect in the subject phones.

Consumer Legal Remedies Act Claim

The plaintiffs alleged that Samsung violated California’s Consumer Legal Remedies Act by failing to disclose that the phones were prone to overheating, fire, and explosion. The court treated this as an omission claim. Under California law, a duty to disclose may arise when, among other circumstances, the defendant has exclusive knowledge of material facts, actively conceals a material fact, or makes partial statements that are misleading without additional information.

The court found that the plaintiffs did not adequately allege that Samsung knew of a defect before the relevant purchases. Many of the cited consumer complaints involved older or different phone models, and the number of complaints concerning the subject phones was insufficient to establish pre-sale knowledge. The court also found that the allegations about Samsung’s “durable and reliable” marketing were sales puffery—general promotional statements that were not actionable—and did not establish active concealment or misleading partial representations.

The court granted the motion as to the Consumer Legal Remedies Act claim and dismissed that claim with prejudice.

False Advertising Law Claim

The court held that the False Advertising Law claim also failed because the plaintiffs had not adequately alleged that Samsung knew the challenged statements were false or misleading when made. Because the lack of pre-sale knowledge was dispositive, the court did not address the defendants’ other arguments concerning this claim. The court dismissed the False Advertising Law claim with prejudice.

Unfair Competition Law Claim

The plaintiffs pursued the Unfair Competition Law under its unlawful, fraudulent, and unfair prongs. The court rejected each theory. The unlawful theory depended on alleged violations of the Consumer Legal Remedies Act and False Advertising Law, which the court had found insufficient. The fraudulent theory failed because the plaintiffs had not established a duty to disclose, and the unfair theory failed because they had not adequately pleaded that Samsung knew of the alleged defect and therefore had a duty to disclose it.

The court dismissed the Unfair Competition Law claim with prejudice.

Unjust Enrichment Claim

The plaintiffs alleged that Samsung charged more than the phones’ true value and received greater financial gains because of the alleged defects and omissions. The court explained that California law treats unjust enrichment as an equitable, restitution-based obligation and that equitable relief is generally unavailable when legal remedies provide adequate compensation.

The court did not decide that the express warranty was necessarily a binding contract at the pleading stage. Instead, it dismissed the claim because the plaintiffs had not adequately alleged Samsung’s knowledge of a defect or a corresponding duty to disclose it. The court granted the motion as to the unjust-enrichment claim and dismissed that claim with prejudice.

Disposition

The court granted the defendants’ motion to dismiss without leave to amend. It dismissed all four causes of action—those under the Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, and the unjust-enrichment claim—with prejudice.